MCA introduces new Rules on beneficial ownership

Companies (Amendment) Act 2017 has replaced the provision relating to Significant Beneficial Owners by amending section 90 of the Companies Act.

Recently, Ministry of Corporate Affairs (MCA) notified Rules on significant beneficial ownership which aim to fix the gap in existing provisions.

Under the Companies Act 1956 and under the Companies Act 2013, a registered and beneficial owner is required to file a declaration with the company, if the registered shareholder was not the beneficial shareholder.

The company, in turn, was required to file a declaration with the Registrar of Companies (RoC). However, the provision did not provide a mechanism to identify the ‘significant beneficial owners’, which imposed difficulties on regulatory authorities to verify the identity of individuals who ultimately owned and controlled the company.